2021 Social Security wage base announced
By Sally P. Schreiber, J.D.
October 14, 2020
The Social Security Administration (SSA) announced
that the maximum amount of wages subject to the old age, survivors, and disability insurance (OASDI) tax will increase to $142,800 in 2021 from $137,700 in 2020. The OASDI tax rate is 6.2%, so an employee with wages up to or above the maximum in 2021 will pay $8,853.60 in tax, with the employer paying an equal amount. Self-employed individuals pay tax at a 12.4% rate up to the limit, for a $17,707.20 maximum amount of OASDI tax.
The Medicare hospital insurance tax of 1.45% each for employees and employers, or 2.9% for the self-employed, has no wage limit.
The SSA also announced that recipients of Social Security benefits will receive a 1.3% cost-of-living adjustment and that the earnings test for the amount of income that benefit recipients can receive without having their benefits reduced each year is $18,960 before full retirement age, and the limit taxpayers can earn in the year they reach full retirement age is $50,520, both increased from 2020.
— Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a senior editor.https://www.journalofaccountancy.com/news/2020/oct/social-security-wage-base-2021.html